Practice neco model questions vol1 commerce 2025 Past Questions

Question 1 View Details

A Nigerian exporter receives a foreign payment of $\$50{,}000$. The following deductions apply: export duty of 5% of the invoice value, freight cost of $\$2{,}000$, insurance of 1% of the invoice value, and a bank commission of 2% on the amount remaining after the previous deductions. The prevailing exchange rate is $\text{₦}750$ per US\$1, but the bank applies a spread of 3% on this rate. What is the net amount in Naira that the exporter will receive after all deductions and the exchange conversion?

Correct A. 32082750

B. 31726275

C. 34067250

D. 32737500

Correct Answer: A

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Question 2 View Details

A company uses three communication channels to send messages to its retailers:\n- Email: cost $\text{₦}50$ per message, delivery instant.\n- Fax: cost $\text{₦}120$ per page, delivery within 2 hours.\n- Courier: cost $\text{₦}500$ per letter, delivery within 24 hours.\nThe company must send 200 messages in a month: 30 urgent messages (must be delivered within 2 hours), 80 standard messages (must be delivered within 24 hours), and 90 low‑urgency messages (no time constraint). Email can handle at most 150 messages per month. Determine the minimum total cost (in Naira) for sending all 200 messages while meeting the delivery requirements.

A. 16300

B. 10000

Correct C. 13500

D. 32500

Correct Answer: C

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Question 3 View Details

A company must produce a business report containing 12,000 words. With Times New Roman 12‑pt, single spacing and 1‑inch margins, each page can accommodate 500 words. The report includes three tables, each occupying half a page, a title page printed on one side only, and a specially designed cover page printed on one side only. The cover page costs $\text{₦}500$ per side, while all other pages cost $\text{₦}200$ per side. Printing is double‑sided, but the title and cover pages are single‑sided. The cost schedule is: first 100 sides at $\text{₦}200$ each, next 200 sides at $\text{₦}180$ each, and any side beyond that at $\text{₦}150$ each. A binding fee of $\text{₦}2{,}500$ is charged only if the total number of pages exceeds 150. What is the total cost (in Naira) to produce and bind the report?

A. 5700

B. 6300

Correct C. 5900

D. 6100

Correct Answer: C

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Question 4 View Details

A wholesaler purchases goods at a cost price of $\text{₦}1{,}200$ per unit. Fixed monthly overheads amount to $\text{₦}150{,}000$. The wholesaler sets a uniform selling price of $\text{₦}1{,}800$ per unit before any discount. Discount policy per order is: no discount for orders of up to 100 units, 5% discount on the selling price for orders of 101-300 units, and 10% discount for orders exceeding 300 units. Assuming the wholesaler can split the total sales into any number of orders of any size to maximise profit, what is the minimum total number of units that must be sold in a month to achieve a profit of at least $\text{₦}200{,}000$?

Correct A. 584

B. 620

C. 560

D. 600

Correct Answer: A

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Question 5 View Details

A project is financed with the following capital structure: 40% equity, 30% 10% cumulative preference shares, and 30% 12% debentures. The corporate tax rate is 30%. Preference dividends are paid from after‑tax profit (i.e., they are not tax‑deductible), while interest on debentures is tax‑deductible. The required return on equity is 15%. Calculate the weighted average cost of capital (WACC) for the project, expressed as a percentage (rounded to two decimal places).

A. 13.05

Correct B. 11.52

C. 10.84

D. 12.30

Correct Answer: B

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Question 6 View Details

A trader sells three products. Product A: unit price $\text{₦}12{,}500$, quantity 8. Product B: unit price $\text{₦}7{,}200$, quantity 15. Product C: unit price $\text{₦}3{,}450$, quantity 20. The invoice gives a trade discount of $12\%$ on the total of the three products. After the discount, a VAT of $7.5\%$ is added. The buyer pays a down‑payment of $30\%$ of the amount after VAT. The remaining balance is to be paid $45$ days later, and the seller charges simple interest of $1.8\%$ per month on the outstanding balance for the period it remains unpaid. What is the total amount the buyer must finally pay (down‑payment plus the amount due after interest), rounded to the nearest naira?

A. 262042

B. 268645

Correct C. 266995

D. 248367

Correct Answer: C

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Question 7 View Details

A retailer purchases 120 units of Item X at $\text{₦}2{,}350$ each and 80 units of Item Y at $\text{₦}3{,}150$ each. He sells all units of X at $\text{₦}2{,}800$ each and all units of Y at $\text{₦}3{,}600$ each. What is the overall percentage profit on the whole transaction, correct to one decimal place?

Correct A. 16.9

B. 116.9

C. 14.4

D. 16.8

Correct Answer: A

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Question 8 View Details

A trader imports goods costing $\text{€}4{,}500$. The exchange rate is $\text{₦}560$ per euro. The bank charges a commission of $1.2\%$ on the converted amount. What is the total naira amount payable for the import?

Correct A. 2550240

B. 2520000

C. 2570400

D. 2545200

Correct Answer: A

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Question 9 View Details

A home‑based baker produces two types of cakes. Cake A costs $\text{₦}1{,}200$ in raw materials per cake and sells at a marked price of $\text{₦}2{,}000$. Cake B costs $\text{₦}1{,}500$ in raw materials per cake and sells at a marked price of $\text{₦}2{,}500$. The baker offers a $10\%$ discount on the total bill if a customer buys at least 8 cakes in total, and a further $5\%$ discount on the amount after the first discount if the total number of Cake A purchased is at least 5. After all discounts, a sales tax of $7.5\%$ is added. If a customer buys 5 Cake A and 4 Cake B, what is the total amount payable (including tax), rounded to the nearest naira?

Correct A. 18383

B. 20425

C. 19350

D. 18297

Correct Answer: A

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Question 10 View Details

A small business uses a telephone service that charges $\text{₦}45$ per minute for the first 200 minutes each month, $\text{₦}35$ per minute for the next 300 minutes, and $\text{₦}25$ per minute for any usage beyond 500 minutes. In addition, a fixed monthly line rental of $\text{₦}8{,}500$ is charged. If the business used 720 minutes in a month, what is the total monthly telephone bill?

A. 40900

Correct B. 33500

C. 36500

D. 25000

Correct Answer: B

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Question 11 View Details

A life insurance company offers a term policy with a sum assured of $\text{₦}500,000$. The expected claim cost is $60\%$ of the sum assured. Administrative expenses are $5\%$ of the premium actually received, and the insurer wants a profit margin of $10\%$ of that premium. A risk loading of $12\%$ is applied to the base premium, and a discount of $7\%$ is offered to policyholders who pay annually. What should be the advertised premium (before the discount) in naira, rounded to the nearest naira?

A. ₦389,300

Correct B. ₦379,300

C. ₦375,000

D. ₦369,300

Correct Answer: B

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Question 12 View Details

A bank grants a loan of $\text{₦}2,000,000$ at a nominal annual interest rate of $12\%$ convertible quarterly. The borrower must make equal monthly repayments over 3 years. A processing fee of $1.5\%$ of the loan amount is added to the loan principal, and the first month's interest is discounted by $20\%$. Determine the regular monthly repayment amount (excluding the first‑month discount), rounded to the nearest naira.

Correct A. ₦67,357

B. ₦68,357

C. ₦70,000

D. ₦66,357

Correct Answer: A

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Question 13 View Details

A retailer purchases 500 units of a product for a total cost of $\text{₦}150,000$. The retailer adds a 30\% markup on the cost price to set the selling price per unit. For purchases of 20 units or more, a 12\% discount is offered on the selling price, and a sales tax of 5\% is applied to the discounted price. The retailer wishes to achieve an overall profit margin of at least 18\% on total revenue after tax for the whole batch. How many units must be sold at the bulk‑discount price (i.e., with discount and tax) to meet the profit target? Give the smallest whole number of units.

Correct A. 0

B. 20

C. 5

D. 12

Correct Answer: A

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Question 14 View Details

An advertising agency plans a campaign using two media: television and social‑media posts. Each TV spot costs $\text{₦}180,000$ and reaches 300,000 viewers. Each social‑media post costs $\text{₦}25,000$ and reaches 45,000 viewers. The agency must maintain a ratio of at least two social‑media posts for every TV spot purchased. The total reach required is at least 6,000,000 viewers, and the total cost must not exceed $\text{₦}4,000,000$. Determine the minimum total cost that satisfies both the reach and ratio constraints, and state the corresponding numbers of TV spots and social‑media posts.

Correct A. ₦3,350,000 (0 TV spots, 134 social‑media posts)

B. ₦3,200,000 (1 TV spot, 120 social‑media posts)

C. ₦3,500,000 (0 TV spots, 140 social‑media posts)

D. ₦3,350,000 (2 TV spots, 100 social‑media posts)

Correct Answer: A

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Question 15 View Details

An investor buys shares of three companies on the stock exchange as follows:\n- Company A: 150 shares at $\text{₦}2,350$ each, brokerage commission 0.5% of the transaction value.\n- Company B: 200 shares at $\text{₦}1,780$ each, commission 0.4%.\n- Company C: 120 shares at $\text{₦}3,120$ each, commission 0.6%.\nLater the investor sells all shares at these market prices:\n- Company A: $\text{₦}2,560$ per share.\n- Company B: $\text{₦}1,650$ per share.\n- Company C: $\text{₦}3,300$ per share.\nA securities transaction tax (STT) of 0.15% is levied on the total sale value. After that, a capital gains tax of 10% is applied to the net profit (sale proceeds after STT minus total purchase cost including commissions). What is the investor's net profit after all taxes and commissions, rounded to the nearest naira?

A. ₦19,500

B. ₦20,024

C. ₦17,835

Correct D. ₦18,002

Correct Answer: D

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Question 16 View Details

A partnership consists of three partners A, B and C who invest capital of ₦120,000, ₦80,000 and ₦100,000 respectively for one year. The partnership earns a total profit of ₦96,000 for the year. The profit‑sharing agreement states that A receives a fixed salary of ₦12,000, B receives $10\%$ of the profit remaining after the salary is paid, and the balance of the profit is divided among the three partners in proportion to their capital contributions. How much profit does partner C receive?

Correct A. 25200

B. 28000

C. 26000

D. 24000

Correct Answer: A

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Question 17 View Details

A retailer purchases 200 units of a product at a cost of ₦1,500 each. He sells all the units at the same selling price per unit and makes a total profit of ₦120,000. What is the selling price per unit?

Correct A. 2100

B. 2000

C. 2150

D. 2250

Correct Answer: A

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Question 18 View Details

A bank offers a nominal annual interest rate of 12\% convertible quarterly on a loan. A borrower takes a loan of ₦500,000 and agrees to repay it in equal quarterly installments over 2 years. What is the amount of each quarterly installment (rounded to the nearest naira)?

Correct A. 71210

B. 71000

C. 70500

D. 72000

Correct Answer: A

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Question 19 View Details

A television has a marked price of ₦150,000. The store first gives a seasonal discount of 15\%, then a members' discount of 5\% on the reduced price, and finally adds sales tax of 12\% to the discounted price. Under the Consumer Protection Act, the final price of such a television may not exceed 90\% of the marked price after all lawful discounts and taxes. Determine whether the store's final price complies with the Act. If it does not, state the maximum lawful price and the amount by which the consumer's price exceeds that limit.

A. No; maximum lawful price = 136500 naira; excess = 1500 naira

B. No; maximum lawful price = 135000 naira; excess = 500 naira

Correct C. No; maximum lawful price = 135000 naira; excess = 660 naira

D. Yes; maximum lawful price = 135000 naira; excess = 0 naira

Correct Answer: C

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Question 20 View Details

The exchange rate is ₦410 per US\$. An importer pays US\$3,200 for imported goods. What is the amount payable in naira?

A. 1320000

B. 131200

Correct C. 1312000

D. 1280000

Correct Answer: C

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Question 21 View Details

A wholesaler sets a list price per unit $L$. He gives a trade discount of 10% on $L$ and, if payment is made within 15 days, a further cash discount of 2% on the trade‑discounted price. A retailer buys 200 units and, after taking both discounts, pays a total of $\N{92,000}$. The wholesaler wants a profit margin of 15% on his cost price per unit. Determine (a) the wholesaler's cost price per unit, and (b) the original list price per unit he should have set.

Correct A. (a) $\approx\N{453.52}$ per unit, (b) $\approx\N{521.55}$ per unit

B. (a) \$\\approx\\N{440.00}\$ per unit, (b) \$\\approx\\N{506.00}\$ per unit

C. (a) \$\\approx\\N{452.00}\$ per unit, (b) \$\\approx\\N{520.00}\$ per unit

D. (a) \$\\approx\\N{460.00}\$ per unit, (b) \$\\approx\\N{530.00}\$ per unit

Correct Answer: A

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Question 22 View Details

A retailer currently sells a product at a unit selling price of $\N{2,500}$, with a variable cost per unit of $\N{1,600}$ and fixed monthly costs of $\N{300,000}$. He sells 1,500 units each month. He is considering raising the selling price by 5% but expects the sales volume to fall by 10% because of price elasticity. Will the proposed price change increase his monthly profit? If so, what will the new profit be?

A. \\N{1,012,500}

B. \\N{1,150,000}

C. \\N{950,000}

Correct D. \N{1,083,750}

Correct Answer: D

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Question 23 View Details

A retailer faces an annual demand of 12,000 units for a product that costs $\N{800}$ per unit. The ordering cost per order is $\N{5,000}$ and the holding cost is 20% of the unit cost per year. The retailer wishes to keep a safety stock equal to 10% of the Economic Order Quantity (EOQ). Determine the EOQ and the total annual cost (ordering + holding + purchase) taking the safety stock into account.

A. EOQ $\approx\N{1,000}$ units; total annual cost $\approx\N{9,800,000}$

B. EOQ $\approx\N{950}$ units; total annual cost $\approx\N{10,100,000}$

Correct C. EOQ $\approx\N{866}$ units; total annual cost $\approx\N{9,752,480}$

D. EOQ $\approx\N{800}$ units; total annual cost $\approx\N{9,200,000}$

Correct Answer: C

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Question 24 View Details

A consumer sees an advertisement for a washing machine listed at $\N{150,000}$ with a "20% discount" and a "cash rebate of \N{10,000}\". The ad also claims "Free delivery within Lagos". After purchase the seller reveals that a hidden surcharge of $\N{15,000}$ was added before the discount, the cash rebate is only given if the buyer registers online within 7 days (which the consumer missed), and the consumer was charged $\N{12,000}$ for delivery. The consumer paid the full amount at the store. Determine the effective price actually paid, the net saving (if any) compared with the advertised list price, and state whether the advertisement is likely to be considered misleading under the Nigerian Consumer Protection Act.

A. Effective price \N{138,000}; net saving \N{12,000}; advertisement is likely misleading under the CPA.

B. Effective price \N{146,000}; net saving \N{4,000}; advertisement is not misleading under the CPA.

Correct C. Effective price \N{144,000}; net saving \N{6,000}; advertisement is likely misleading under the CPA.

D. Effective price \N{150,000}; net saving \N{0}; advertisement is likely misleading under the CPA.

Correct Answer: C

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Question 25 View Details

A freight company charges for a shipment of 2,500 kg from Lagos to Kano as follows: $\N{120}$ per kg for the first 1,000 kg, $\N{100}$ per kg for the next 1,000 kg, and $\N{80}$ per kg for any weight above 2,000 kg. If the total freight cost exceeds $\N{250,000}$, a discount of 5 % is applied to the amount above $\N{250,000}$. Calculate the total freight charge for this shipment.

A. \N{247,000}

B. \N{260,000}

Correct C. \N{259,500}

D. \N{257,000}

Correct Answer: C

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